Thursday, May 12, 2016

The Scramble

The month of May: Commencements, Indianapolis 500, Tornados, and The Scramble.

What the heck is The Scramble? Historically the month of May is the one month of the year when there are many golf tournament fundraisers, the weather is better, time is available before summer vacations, Christmas and tax bills have been paid, we have some cache (cash) to spend.

Why not a golf fundraiser? From food banks, catholic charities, Red Cross, Cancer Society, this is the month. The Scramble is the format of choice for fundraising tournaments. The Scramble allows the low handicap (good) player to play with the high handicap (lousy) player. It can get complicated for the average non-player: everyone hits their first shot, you select the best, then you all hit from that point again, and repeat this process until you are in the hole. The fewest strokes (hits) wins: sounds easy. But then you have mulligans (second chances), cigars, alcohol, bad jokes, bizarre golf pants, all thrown in this can get quite intimidating.

Needless to say from POTUS, to POTULV, from CEOs to OGs, all kinds of golfers participate. My only advice do not talk about two things on a golf course: Hillary Clinton and Donald Trump. It will get ugly, stick to the NBA and NHL playoffs, the price of gasoline, summer plans, and of course the Darth Vaders in your office and you will be fine.

COLLEGE CHRONICLESVOTING ON UNIVERSITY OF PHOENIX'S FUTURE: Apollo Education Group is relying on its shareholders to approve a merger today that would take the company private and prevent it from having to sell off the University of Phoenix or take other, less desirable measures to address declining performance and cash flow. The board of directors has already voted "aye" for the proposal on the table, which would sell institutions housed under Apollo Global - including Phoenix, Western National and Iron Yard - to a consortium of investors. They include Najafi Companies, Apollo Global Management and The Vistria Group, whose Chief Operating Officer Tony Miller, a deputy secretary at the Education Department from 2009-13, would become chairman of the Apollo board under the $1.1 billion deal.

Because the transaction involves a change in ownership, it requires the approval of a majority of shareholders who don't typically cast votes on company business. The Apollo board pleaded with them in a letter last week for their blessing - and noted that if they don't, their approval won't be required to pursue one of the alternative plans like spinning off company business or converting Phoenix into a nonprofit school.

If shareholders vote "no" anyway? "The company could face serious consequences, including a further decline in share price that could have an impact on the company's access to liquidity," the letter says. "The board appreciates that the proceeds of any sale of the University of Phoenix may be limited. However, the board believes that selling the University of Phoenix may still be an appropriate step to mitigate downside risk inherent to the status quo operation of the University of Phoenix, which may negatively impact the value of the University of Phoenix and the value of Global." Phoenix said earlier this month it would cut about 470 jobs as part of its five-year "transformation plan".


University of Southern California – May 13: Larry Ellison, Oracle founder and chairman

University of Arizona – May 13: Vivek Murthy, U.S. Surgeon General

Scripps College – May 14: Madeleine Albright, former Secretary of State

Eureka College – May 14: David Axelrod, political advisor

University of Montana – May 14: J.K. Simons, Oscar winning actor

Monmouth College – May 15: Jon Meacham, historian and author

Duke University – May 15: Mike Krzyewski, college basketball coach

POTUS WEEK - Monday, the President will deliver the commencement address to the 2016 graduating class of Howard University ... On Tuesday, the President will welcome the NCAA Champion UConn Huskies women's basketball team ... On Friday, the President will host the President of Finland and the Prime Ministers of Norway, Sweden, Denmark and Iceland at the White House for a U.S.-Nordic Leaders Summit. ...

In the evening, the President and the First Lady will host the Nordic leaders for a State Dinner. On Sunday, the President will travel to Rutgers University's New Brunswick campus to address 2016 graduates at Rutgers University's 250th Anniversary commencement.

GOOD READ - Obama and Bryan Cranston on the Roles of a Lifetime," by Philip Galanes in his "Tables for Three" column in the May 8 N.Y. Times Sunday Styles section -- Obama: "I just spoke to a group of young interns who rotate out every six months." ... Cranston: "And you crushed their spirit?" Obama : "I told them, if you had to choose a moment in human history to live ... you'd choose now. There's power in nostalgia, but the fact is the world is wealthier, healthier, better educated, less violent, more tolerant, more socially conscious and more attentive to the vulnerable than it has ever been."

DONALD TRUMP'S DEBT PROBLEM - Donald Trump has a debt problem. Twice in the last five days the presumptive Republican nominee has said things about dealing with the $19 trillion federal debt that left Wall Street terrified, Republicans dumbfounded and Democrats licking their chops.

The trouble for Trump began last Thursday on CNBC when he appeared to suggest that as president he would not repay all the U.S. debt owed to creditors. Asked if the U.S. should repay its debts in full or ask creditors to take less, Trump said: 'I would borrow, knowing that if the economy crashed, you could make a deal.' ...

Financial experts instantly leaped on the comments, suggesting that Trump - who is no stranger to bankruptcy as an executive - would allow the U.S. to default for the first time in its history, an event which could send interest rates soaring and tank the U.S. economy.

FAILED CLEAN-UP ATTEMPT - Trump went on CNN on Monday morning to clear things up. Of course he would never allow the U.S. to default. Anyone who suggested such a thing must be 'crazy.' What Trump meant to say was that if interests rates rise he would consider buying back existing U.S. debt at a lower prices. As interest rates rise, the price of existing debt goes down. ... But then he landed himself right back in the soup.

"'This is the United States government,' Trump said. 'First of all, you never have to default because you print the money, I hate to tell you.' That comment - that the U.S. can simply pay back its trillions of dollars in debt by printing a ton more money - drove Wall Street crazy again.

"'If there is ever an example of how dumb it is to print money to handle debt I'm in a country which has had had to learn that the hard way more than once,' said David Kotok, chief investment officer at Cumberland Advisors, speaking from a conference in Argentina.

"'It's a stupid idea. You don't discharge debt especially U.S. dollar debt by printing money. You do print money to create liquidity for banking systems in trouble but you don't print money to cheapen your debt which is the reserve currency of the world."

HOW TRUMP AND CLINTON INVEST - The Vanguard 500 Index Fund is Hillary and Bill Clinton's top holding - they've invested between $5 million and $25 million in it ... The $185 billion fund, which charges a 0.05 percent fee, is the only investment listed aside from cash and insurance policies. Trump's biggest bet has been on the Obsidian hedge fund run by BlackRock Inc., with $25 million to $50 million invested, according to his July 2015 filing.

The hedge fund, which had about $1.9 billion in assets as of March, charges a 1 percent management fee and 20 percent of profits. Trump also reported placing $1 million to $5 million in each of three hedge funds run by John Paulson's Paulson & Co., and investments of $100,000 to $5 million in 11 mutual funds managed by Baron Capital Management.

DO YOU KNOW THE WAY TO SAN JOSE? - Poor San Jose-so far from God, so close to San Francisco. San Jose is the 10th largest city in the United States, the third most populous in the state of California-and No. 1 in disrespect. With more than 1 million people, it's Northern California's biggest municipality-but it's constantly outshined by those 850,000 San Franciscans to its north.

BIRTHDAYS THIS WEEK – Birthday wishes and thoughts this week to: Erin Andrews (38) Manhattan Beach, CA.; Candice Bergen (70) Montecito, CA.; George Clooney (55) Toluca Lake, CA.; Missy Franklin (21) Denver, CO.; Robert Osborne (84) Studio City, CA.; Robb Suffredini …famous Detroit fan; Frankie Valli (82) Palm Beach, FL.; Sula Vanderplank ….famous world traveler; George Will (75) Reston, VA.

NEWSPAPER WAR - Two American newspaper stalwarts are in combat mode. Gannett (of USA Today fame) wants to buy Tribune Publishing (of The Los Angeles Times, Chicago Tribune fame). Last week, Tribune rejected Gannett's (unsolicited but arguably veeerrry generous) $815 million offer as an 'opportunistic proposal' that 'understates the Company's true value. Gannett fired back with how could Tribune 'deny their shareholders this compelling, immediate and certain cash value' and shame on them for not 'making a counterproposal or otherwise negotiating or providing any constructive feedback.' And it ain't over yet: 'Gannett has the financial capacity to fund this all-cash offer and our Board and management team are ready to negotiate a transaction with Tribune and committed to making this a reality.

BABY BOOMER FANTASY: GEEZER ROCK FESTIVAL - Confirming weeks of rumors, Goldenvoice Entertainment announced it is bringing Bob Dylan, the Rolling Stones, The Who, Paul McCartney, Neil Young and Pink Floyd's Roger Waters to the Empire Polo Club stage in Coachella, California, during a long October weekend. Rink Rats reader Mark H. says he is going, anyone else?

HUELL HOWSER MOMENT - Calif. History: Why a historic highway that united California's two halves may never reopen to cars.  Opened in 1915, and credited by historians with uniting the economies of Northern and Southern California, the notoriously slow and dangerous roadway had been superseded in 1933 by Highway 99, itself to be replaced in 1970 by the 5 Freeway.

RINK RATS IN THE KITCHENPerfect Hard Boiled Eggs, thanks CTL:

1). Set eggs out of refrigerator – bring to room temperature
2). Place in small sauce pan – cover with water
3). Place on stove – bring to a boil
4). Just when the pan begins to boil, turn down heat to a low boil, leave on burner for 12-13 minutes
5). Drain water, cover with cold water and ice, sit in ice bath 13 minutes
6). Drain, place in refrigerator – viola the “Perfect Hard Boiled Eggs”.

GAS PROBLEMS - Cost estimate of Los Angeles-area gas leak hits $665 million: San Diego-based Sempra had estimated costs of $330 million in its annual report in February, but that was before courts forced its Southern California Gas Co. to continue paying to house thousands of relocated residents.

WET HOT AMERICAN SUMNER -- The Sumner Redstone saga has industry insiders salivating in Hollywood and Times Square as the long-awaited trial probing the 92-year-old Viacom and CBS chief kicked off in Los Angeles on Friday. This soap opera's got it all: power, sex, divorce, family intrigue and a $42 billion media empire to boot. So it's easy to see why publications from the California trades to the New York tabloids have been all over it. The New York Times had three stories in its business section on Friday raising the curtain on the proceedings. Last week, Fortune dropped a three-part, supposedly 16,000-word feature on the whole affair: "The Disturbing Decline of Sumner Redstone". (

And you can expect a lot more where that came from over the coming week, the trial is scheduled to last five days.

ENDORSEMENTS -- Democratic U.S. Senate candidate Loretta Sanchez (age 56, Chapman University 1982) 46th Congressional District Representative by the Inland Valley Bulletin, Ron Hasse Publisher.

CONVENTION WATCH -- Bush 41 and Bush 43 plan to skip GOP convention: The last two Republican nominees, Mitt Romney and John McCain, also plan to avoid the event.


Major League Baseball Game of the Week: Saturday May 14, 1:05 pm ET; Fox – Chicago Cubs (25-8) vs. the New York Metropolitans (21-12), one of these two teams will be in the World Series come October, Cubbies win 6 - 4.

Season to date (45 -26)

MARKET WEEK – U.S. corporate profits, weighed down by the energy slump and slowing global growth, are set to decline for the third straight quarter in the longest slide in earnings since the financial crisis. ... Weakness was felt across the board, with executives from Apple Inc. to railroad Norfolk Southern Corp. and snack giant Mondelez International Inc. saying the current quarter remains tough. ...

The concerns from company executives echo weak economic data released Thursday morning, which showed U.S. gross domestic product rose just 0.5 percent in the first quarter. Business investment and consumer spending on goods slowed, while consumer spending on services climbed. ... Based on the 55 percent of companies in the S&P 500 index that had already reported results ... Thomson Reuters expects overall earnings to decline by 6.1 percent in the first quarter.

DOLLAR DROPS - The dollar dropped against almost all of its major peers after weaker-than-expected U.S. economic growth dimmed prospects for a Federal Reserve interest-rate increase at a time when monetary easing is being put on hold elsewhere. Asian stocks fell and crude oil traded near $46 a barrel. ... The yen was headed for its biggest weekly jump since 2008 after the Bank of Japan unexpectedly refrained from adding to record stimulus.

The slowest pace of American economic expansion in two years reignited some concern over the global outlook, and pushed out bets on the potential timeline for tighter Fed policy. This central-bank inaction also comes amid a middling U.S. earnings season, with disappointing results from technology companies compounded by investor Carl Icahn’s decision to sell his stake in Apple Inc.

FIRST QUARTER SUCKS ... AGAIN - While Q1 GDP in the US came in below consensus at 0.5 percent annualized (from 1.4 percent in Q4), it also gives us little insight into how the Fed might act going forward. Q1 GDP growth in the US has historically been lackluster given a number of seasonal-adjustment issues, and this year was no different. ...

Investment plummeted by 5.9 percent (previously -2.1 percent), the worst we've seen since 2009. This is partly owing to a relatively strong USD and a continued collapse in oil and gas drilling.

Next week: Credit line, boring conferences, and words of the month.

Until Next Time, Adios.

Claremont, CA

May 12, 2016


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